We believe that buying a home is one of the wisest financial choices that anyone could ever make.  Homeownership is a great achievement and a terrific investment.

The Gap Of Wealth

In a Consumer Finance survey done by the Federal Reserve, there has been a constant gap between the wealth of homeowners and those of renters.  See this incredible chart below:

 

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Owning a home can build wealth in a couple of ways
  1. Paying down the mortgage and increasing the equity.
  2. Appreciation (the rise in a home’s value).

sandcastleThe earlier you purchase your own home, the sooner you can enjoy appreciation over the years!  Bestselling author David Bach says, “If you rent, you’ll always be poor.”  He further states, “the longer you rent, the less likely you are to buy and you fall further and further behind.” Bach acknowledges, however, that buying a home isn’t always a right choice for everyone.  For some, it may be smarter to hold off on purchasing a home.  Let The Stott Team help you decide if it’s a good choice for you!

  • Your home builds equity for your future. You can use the equity to move up to a larger home or to help send your children to college.
  • With a fixed interest rate, you know how much you'll be paying each month.
  • The mortgage interest is tax-deductible.
  • You can paint and decorate however you wish.
  • If something breaks, needs repair, etc: you will be the one responsible for making sure it gets fixed.
  • If you decide to move, generally the home must be sold first.
  • In thirty years, your mortgage will be more than likely paid off.
 

  • No equity is build, no matter how long you rent.
  • Your landlord may decide to raise your rent.
  • No tax benefits.
  • You need to check with the landlord before making any sorts of changes.
  • If something breaks, you can call the landlord.
  • When your lease is up, you have the option to move.
  • In thirty years, you'll still have to cough up money for rent.

4 Keys to Profitable Home Ownership

You’re most likely to win by owning, if the following apply to you: 1 You plan to stay put for at least 3 years or more.  In most markets, it can take 3 to 6 years for a home to appreciate enough to offset the costs of selling and moving.

2You are psychologically prepared.  Remember, you won’t be able to call the landlord about the noisy neighbor or the clogged toilet.

3 You have some extra savings.  Smart homebuyers make sure they have savings at least equal to 2 months of mortgage payments after the deal closes.

4 You know how to manage your money.  If you live off of your credit cards or can never remember where you spent your money, you would need to turn your habits around before you think about buying.

Also, in a study done by the Joint Center for Housing Studies at Harvard University, they found the following:

  1. The housing market makes important contributions to the larger economy and also remains the primary accrual of wealth for most Americans.
  2. Home equity constitutes 1/5 of the total household net wealth.
  3. 6 in 10 Homeowners had more home equity than other assets combined.
  4. Home equity is important to lower income households.  The median wealth of these households is 81 times greater than the median wealth of renters with comparable income.
  5. Home equity loans and lines of credit have built-in tax advantages for households that itemize their deductions.
  6. Homeowners tend to accumulate substantially more wealth than renters.  Preliminary estimates suggest that a typical renter household in 1984 had accumulated $42,000.00 in net wealth by 1999.  However, a typical owner household in 1984 had accumulated $167,000.00 over the same period of time – that’s almost a 400% difference!
What Could You Do With An Extra $1250,000?